Long-awaited CMS rule on overpayments gives 6-year lookback, specifies overcoding

by Roy Edroso on Feb 11, 2016

Four years after the proposed rule was issued, CMS has issued the final 60-day overpayment rule, formally called Reporting and Returning of Overpayments. It reduces the look-back period within which the agency can act on determinations that providers have received too much in Medicare funds but sets rigorous standards for determining what an overpayment is – including “over-coded” E/M claims.

The good news is that while the proposed rule issued in 2012 stipulated a 10-year period within which overpayments must be reported and returned, the final sets the deadline to “within six years of the date the overpayment was received.” CMS said it cut this back “to avoid imposing unreasonable additional burden or cost on providers and suppliers.”

However, the rest of the rule puts tight requirements on providers:

You must pursue all reasonable suspicions. “Congress' use of the term ‘knowing’ in the Affordable Care Act [for overpayment purposes] was intended to apply to determining when a provider or supplier has identified an overpayment,” the rule says. This knowing is determined not only by obvious discoveries, but as also as a result of suggestions leading to a “reasonable inquiry,” which must then be conducted “with all deliberate speed.”*

CMS’ gives a daunting example: “A provider that receives an anonymous compliance hotline telephone complaint about a potential overpayment may have incurred a duty to timely investigate that matter, depending on whether the hotline complaint qualifies as credible information of a potential overpayment. ... If the provider fails to make any reasonable inquiry into the complaint, the provider may be found to have acted in reckless disregard or deliberate ignorance of any overpayment.”

Another interesting example: A practice starts billing more Medicare claims with "no apparent reason," such as a new partner or practice type, for the increase.

When you find out, the clock starts. Once identified, providers have 60 days to report the reason for it to “the secretary [of HHS], the state, an intermediary, a carrier or a contractor in writing.” Most providers will presumably report to their contractors.

Note that the rule is limited to Parts A and B, “given the differences that exist between Medicare Parts A and B and Medicare Parts C and D and Medicaid.”

Overcoding counts. The rule says overpayments are:

  • Medicare payments for noncovered services;
  • Medicare payments in excess of the allowable amount for an identified covered service;
  • Errors and nonreimbursable expenditures in cost reports;
  • Duplicate payments; and
  • Receipt of Medicare payment when another payer had the primary responsibility for payment (i.e. secondary payer).

“Payments in excess” would apparently include overcoding. CMS gives the example of billing 99213 (Established patient office or other outpatient visit, typically 15 minutes) when only a 99212 (Established patient office or other outpatient visit, typically 10 minutes) is supported by documentation. "Providers and suppliers must report and return overpayments identified as a result of upcoding, whether the inappropriate coding was intentional or unintentional,” CMS says.

Even "a patient death occurring before the service date on a submitted claim" may be considered an overpayment, CMS adds. "An overpayment must be reported and returned regardless of the reason it happened – be it a human or system error, fraudulent behavior or otherwise.”

The 132-page rule includes instructions on repayment methods -- overpayments associated with cost reports, for example, may be “reported through the existing cost report reconciliation process” – and other technical details.

Watch Part B News for more reporting and analysis this rule.

* Update, 3/21/16: The "all deliberate speed" guidance is from the proposed rule, not the final rule. In the final rule, CMS says reasonable diligence would require no more than six months for a good-faith investigation of credible information and calculation of the overpayment. For a fuller account, see the updated story in our March 7 issue.

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